Many of China's 262 resource-dependent cities have witnessed the depletion of their natural resources due to decades of excessive exploitation. The exploitation of these resources had once driven their provincial economies, contributing immensely to China's economic miracle. However, as their resources have dried up, these localities have become saddled with problems such as a slowing economy, environmental degradation, low-level redundant development, unemployment and an overburdened social security system. Experts say these cities need to muster the resolve to transform their economies, or remain a burden on China's already struggling economy. Global Times reporter Liu Tian dropped into several resource-dependent cities in Heilongjiang Province to explore the difficulties they face and try to find a way out.

Vendors sell coal at a morning market in Hegang, Northeast China's Heilongjiang Province, on December 13, 2014. Photo: CFP

There's a lot of pressure on China's provinces whose GDP grew by less than 7 percent in 2014.

Premier Li Keqiang said Thursday that China has the ability to achieve the government's growth target of about 7 percent for 2015, according to the central government's website.

Five provinces in China reported GDP growth of less than 7 percent in 2014: North China's Shanxi and Hebei provinces, and Northeast China's Heilongjiang, Liaoning and Jilin provinces.

Things haven't gone better this year. In terms of GDP growth, these five provinces ranked among the bottom six regions in China for the first quarter of 2015, people.cn reported on April 29, citing data from financial data provider Wind.

Local governments, experts and scholars have long attributed the economic slowdown in these provinces to the depletion of their natural resources, which had been the pillar of their economies for decades.

"The depletion of natural resources led to the economic recession of China's coal base Shanxi Province, and the same thing is also taking place in China's other resource-dependent cities," Lin Boqiang director of the China Center for Energy Economics Research at Xiamen University, told the Global Times Saturday.

The resource trap

Such things not only take place in these Northeast China cities, but also in other part of the country.

There are a total of 262 cities that the government has identified as resource-dependent, meaning that they rely heavily on the exploitation and processing of local natural resources, according to a development plan the State Council unveiled in December 2013 to guide the sustainable development of resource-dependent cities.

These cities have contributed immensely to China's skyrocketing economic growth over the last decades. They have produced 52.9 billion tons of raw coal, 5.5 billion tons of crude oil, 5.8 billion tons of iron ore and 2 billion cubic meters of timber since the founding of the People's Republic of China in 1949, helping the country establish a solid foundation for an independent and well-rounded industrial system, according to the plan.

However, as these resources have edged closer to depletion, the cities have fallen on hard times as they struggle to come up with new industries to drive their local economies.

It's not just a supply problem either. Falling demand for these resources has also hurt the economies of resource-dependent cities, said Chen Naixing, a researcher at the Institute of Industrial Economics at the Chinese Academy of Social Sciences.

"The economic downturn both at home and abroad has diminished market demand, making it harder for these cities to make money by selling natural resources," Chen told the Global Times Saturday.

The wealth of natural resources once made these cities prosperous, but it has become a disadvantage since production and demand fell.

"These cities are now in pain, and the pain will last a long time," Lin said.

Dealing with the drain

The depletion of natural resources has left these cities with troubling problems. About 600,000 miners across the country are out of work in 2013, according to the plan. More than 1.8 million residents in these cities are living on basic living allowances, a government welfare benefit. Nearly 70 million square meters of area have been classified as shantytowns.

To make matter worse, these cities have to face these problems at a time when their economies are slowing due to resource depletion.

Ordos, North China's Inner Mongolia Autonomous Region, once produced one-sixth of the country's coal. From 2002 to 2011, the city's economy grew faster than that of any other city in China. But falling production and coal prices took their toll on the city. In 2012, the city's GDP growth was the lowest of any city in Inner Mongolia, according to a news report on xinhuanet.com on July 1, 2013.

Currently, nearly 70 percent of the city's coal mines have halted production as they're no longer profitable, or profitable enough, the Economic Observer reported on June 13.

In another example, Dayu county, East China's Jiangxi Province, is widely known as the world's tungsten base. Exploitation and processing of tungsten made up about 80 percent of the county's business revenues and taxes in the industrial sector, the Jiangxi Development and Reform Commission said in a development plan in December 2013. Yet the county has only 61,600 tons of tungsten ore that can be exploited over the next 10 years. From 1949 to 2013, the county has exploited 376,000 tons of tungsten ore, accounting for 12.7 percent of the total production in the country.

Different resource-dependent cities have had similar problems, including Panzhihua, a production base for iron ore and titanium in Southwest China's Sichuan Province; Tongren, a producer of mercury in Southwest China's Guizhou Province; Gejiu, China's largest tin ore producer in South China's Yunnan Province; and Daqing, the home of China's second largest oil field by production in Northeast China's Heilongjiang Province.

As the economies of these cities falter, it is bound to be a drag on their home provinces' economies.

The trouble with transformation

To turn these cities around, they need to transform their economies so they rely far less on resource exploitation, experts said.

But it's easier said than done.

"It is a difficult problem all over the world for resource-dependent cities to transform themselves," Lin said.

Chen agreed with Lin, saying that there hasn't been a very successful example of this kind of transformation in China currently.

Lin stressed that China's resource-dependent cities need to accelerate the transformation of their economies, even if it is already late in the game. 

"These cities should have really started to do this when they still had plenty of money," he said. "Now, they don't have sufficient funds as their resources have dried up and prices of some resources have fallen."

It remains critical that these cities transform their economies as the central government moves to upgrade the country's industrial structure so it is more focused on high-end manufacturing.

Both Lin and Chen agreed that economic transformation hinges on two factors: technology and funding.

The two scholars, who both have been studying the transformation of resource-dependent cities for years, agreed that these cities and their governments must rely on their own efforts rather than waiting for financial aid from the central government.

Lin said that the central government doesn't have the funds to support these cities due to its own financial strains.